News

Industry Takes Hit in 2013

5/1/2014

AFA Caption

BodyText

Defense
contractors reported a 2.6 percent decline in revenue in 2013, due mostly to
sequestration and the ongoing drawdown of forces in Afghanistan, according to a
Deloitte analysis. Seventeen of the top 20 defense
contractors saw a decline in revenue, with those focused on ground equipment,
such as armored vehicles, taking the biggest hit. “Generally, companies
involved in military aircraft and naval ships experienced flat revenues,” states
the report, released April 28. Profit margins, on the other hand, increased
17.9 percent. The report notes that half of this increase is attributable to
“the absence of large one-time charges,” suggesting suppliers are finding new
ways to cut costs and increase efficiency margins. "With US defense
budgets being cut, defense contractors are likely to experience continued
revenue declines," said Deloitte Vice Chairman Tom Captain. "We
anticipate that U.S. defense contractors will aggressively address this revenue
shortfall with foreign military sales, acquisitions, new product introductions,
and growth in adjacent markets."​